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EX-32 - OPTI INC | ex32-1.htm |
EX-31 - OPTI INC | ex31-1.htm |
EX-31 - OPTI INC | ex31-2.htm |
EX-32 - OPTI INC | ex32-2.htm |
EXCEL - IDEA: XBRL DOCUMENT - OPTI INC | Financial_Report.xls |
UNITED
STATES
SECURITIES AND
EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-K
ANNUAL REPORT PURSUANT TO
SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Fiscal Year Ended
March 31, 2012
TRANSITION REPORT PURSUANT
TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Transition Period
from to
Commission File Number
0-21422
OPTi
Inc.
(Exact name of registrant as
specified in its charter)
CALIFORNIA
|
77-0220697
|
(State or other
jurisdiction of incorporated or organization)
|
(I.R.S. Employer
Identification No.)
|
One First Street,
Suite 14, Los Altos, California
|
94022
|
(Address of principal
executive office)
|
(Zip Code)
|
Registrant's telephone
number, including area code (650)
213-8550
Securities registered pursuant to Section 12(b) of the
Act: None
Securities registered pursuant to Section 12(g) of the
Act: Common Stock, no
par value
Indicate by check mark
whether the registrant is a well-known seasoned issuer as
defined by Rule 405 of the Securities Act
Yes
No
Indicate by check mark
whether the registrant is not required to file reports
pursuant to Section 13 of Section 15(d) of the Act
Yes
No
Indicate by check mark
whether the registrant (1) has filed all reports to be
filed by Section 13 or 15 (d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes
No
Indicate by check mark if
disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be
contained, to the best of registrant’s knowledge, in
definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to
the Form 10-K.
Indicate by check mark
whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller
reporting company. See definitions of “large
accelerated filer”, “accelerated
filer”, “non-accelerated filer, and
“smaller reporting company” in Rule 12b-2 of the
Exchange Act.
Large
Accelerated Filer
|
Accelerated
Filer
|
Non-Accelerated
Filer
|
Smaller
Reporting Company
|
Indicate
by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Act).
Yes
No
The aggregate market value of
the voting stock held by non-affiliates of the registrant,
based upon the closing sale price of the Common Stock on June
22, 2012, as reported on the Over the Counter–Bulletin
Board, was approximately $9,935,440 and closing price of
$1.60. Shares of Common Stock held by each executive officer,
director, and by each person who owns 5% or more of the
outstanding Common Stock have been excluded in that such
persons may be deemed to be affiliates. This determination of
affiliate status is not necessarily a conclusive
determination for other purposes.
The number of shares
outstanding of the registrant's common stock as of May 31,
2012 was 11,645,903.
OPTi
Inc.
Form 10-K
For the Fiscal Year Ended
March 31, 2012
INDEX
Page
|
|||
Number
|
|||
PART I
|
|||
Item 1.
|
Business
|
||
Item 1A.
|
Risk Factors
|
||
Item 2.
|
Properties
|
||
Item 3.
|
Legal Proceedings
|
||
Item 4.
|
Mine Safety Disclosures
|
||
PART II
|
|||
Item 5.
|
Market for Registrant’s Common Stock,
Related Stockholder Matters
And Issuer Purchases of Equity
Securities
|
||
Item 6.
|
Not Applicable
|
||
Item 7.
|
Management’s Discussion and Analysis of
Financial Condition and
Results of Operations
|
||
Item 7A.
|
Not Applicable
|
||
Item 8.
|
Financial Statements and Supplementary
Data
|
||
Item 9.
|
Changes in and Disagreements with Accountants on
Accounting
and Financial Disclosures
|
||
Item 9A.
|
Controls and Procedures
|
||
Item 9B.
|
Other Information
|
||
PART III
|
|||
Item 10.
|
Directors and Executive Officers and Corporate
Governance
|
||
Item 11.
|
Executive Compensation
|
||
Item 12.
|
Security Ownership of Certain Beneficial Owners
and Management and Related Stockholder
Matters
|
||
Item 13.
|
Certain Relationships and Related Transactions
and Director Independence
|
||
Item 14.
|
Principal Accountant Fees and Services
|
||
PART IV
|
|||
Item 15.
|
Exhibits and Financial Statement Schedules
|
||
Signatures
|
PART
I
Item
1. Business
Information
set forth in this report includes forward-looking statements
made within the meaning of Section 27A of the Security Act of
1933, as amended and Section 21E of the Securities Exchange
Act of 1934, as amended that involve risks and uncertainties.
The Company’s actual results may differ significantly
from the results discussed in the forward-looking statements
as a result of a number of factors, including the
Company’s current litigation efforts and the
uncertainty inherent in such litigation, and the effects of
the implementation of its Plan of Liquidation. Readers are
encouraged to read “Risk Factors” set forth
below.
Our annual reports on Form
10-K, quarterly reports on Form 10-Q, current reports on Form
8-K and all amendments to those reports, and our Consent
Solicitation Statement on Schedule 14A are available on the
Securities and Exchange Commission (“SEC”)
website http://www.sec.gov.
The Company will furnish a
copy of this Form 10-K upon written request and without
charge. All requests for the Form 10-K should be sent by mail
to: OPTi Inc, One First Street, Suite 14, Los Altos, CA
94022 Attn: Chief Financial Officer.
Approval
of Plan of Liquidation
Subsequent to the end of
the fiscal year, on May 31, 2012, the shareholders of
OPTi Inc., a California corporation (“OPTi” or
the “Company”) approved a Plan of Liquidation
pursuant to which the Company will wind up and dissolve.
The Company anticipates that its liquidation will be
complete by March 31, 2016. During the winding up period,
the Company will cease to carry on business except to the
extent necessary for the beneficial winding up thereof and
except to preserve the Company’s goodwill or
going-concern value.
Revenue
During the fiscal year 2012, the Company recorded net
revenue of $240,000, relating to a license with Allied
Security Trust (“AST”). During the fiscal year
2011, the Company recorded net revenue of $50,625,000
relating to licensing agreements on its Predictive Snooping
and Compact ISA technology. The vast majority of the fiscal
year 2011 revenue relates to licensing activity with Advanced
Micro Devices (“AMD”) and Apple, Inc.
(“Apple”).
OPTi holds a majority of its liquid assets in cash and
cash equivalents.
Background and
Reasons for Liquidation
The Company’s business
strategy has been to pursue licensing opportunities to
resolve potential infringement of the Company’s
proprietary intellectual property. However, the Company
believes that it has already entered into license agreements
with the major developers of core logic chipsets and has
exhausted the litigation opportunities that may be worth
pursuing. The Company currently has only one legal action
pending, and after a thorough review of over twenty other
companies using similar technology which was completed in the
first half of 2011, the Company has not identified any other
potential infringers that it would make economic sense to
pursue. The Board also considered the fact that the
Company’s patents, which form the basis of the
Company’s licensing and litigation efforts, will expire
in July 2015 and February 2016.
The Board concluded that,
even in the unlikely event that the Company was able to
identify another viable defendant and was successful in an
infringement action against such defendant, by the time of
settlement or other resolution of any such action, the value
of any payments would be adversely affected by the limited
remaining life of the patents. Accordingly, the Board
concluded in December 2011 that it is in the best interests
of the Company and its shareholders to cease spending the
Company’s cash in attempting to identify and pursue
potential litigation opportunities which would likely have
negative financial results for the Company.
In addition to attempting to
identify other potential defendants, the Board has also
explored entering into a partnership with another entity and
becoming a “non-practicing entity”. Beginning in
November 2010 the Company explored an opportunity which would
have enabled the Company to license rights to a third
party’s intellectual property and pursue licensing
opportunities and litigation to resolve potential
infringement of such intellectual property. However, in the
third quarter of 2011 the third party decided against this
partnership in light of the Company’s status as a
public company with its resulting reporting obligations. The
Company considered terminating its reporting obligations, but
determined that doing so would cause the Company’s
stock to cease to be traded on the Over the Counter Bulletin
Board which would result in loss of liquidity for the
Company’s shareholders. In addition, an announcement
that the Company was terminating its reporting obligations
would likely result in a material reduction in the
Company’s share price. The Board determined that these
negative consequences to shareholders outweighed the
potential benefits to the Company of pursuing this potential
partnership.
In 2011, the Company also explored
the possibility of operating as a “non-practicing
entity”, in which the Company would raise capital to
acquire intellectual property rights with the intent of
pursuing licensing opportunities and litigation to resolve
potential infringement of such intellectual property.
However, the Company’s efforts to do so were
unsuccessful given the uncertainty that the acquisition of
new intellectual
property could result in
successful litigation. In addition, the Company determined
that it would need to raise at least $50 million of new
capital in order to compete against larger, more established
non-practicing entities to acquire a valuable and diversified
intellectual property portfolio and to hire an experienced
staff to maximize the value of such portfolio. In October
2011, the Board determined that the Company is not in a
position to raise the necessary capital and, therefore,
believes that taking such a course of action would not be in
the best interests of the Company and its
shareholders.
After considering the foregoing
alternatives for more than a year and in light of the absence
of other viable alternatives, in December 2011 the Board
determined in its business judgment that the shareholders
would obtain the greatest return by an orderly winding up and
dissolution of the Company, pursuant to which proceeds from
the resolution of any remaining litigation and any other
assets less payment of applicable liabilities and obligations
would be distributed to its shareholders. The Board reached
this conclusion independently without participation from any
of the major shareholders of the Company.
On or about May 1, 2012, the
Company solicited the written consent of its shareholders to
voluntarily wind up and dissolve the Company and adopt a Plan
of Liquidation as described in the Company’s Schedule
14A filed on April 30, 2012. As of May 31, 2012, the Company
had received consents and non-consents with respect to
8,197,155 shares, and had not received responses with respect
to 3,448,748 shares. 69.7% of the outstanding shares approved
the Proposal. Accordingly, the Plan of Liquidation has become
effective.
On June 4, 2012, the Company
announced a cash distribution of $1.10 per share of the
Company’s stock pursuant to the Plan of Liquidation.
The distribution is to be payable on July 3, 2012
to shareholders of record as of the close of business on
June 26, 2012.
Winding
Up of Company Business; Ongoing Litigation
The Company will cease to
carry on business except to the extent necessary for the
beneficial winding up thereof and except to preserve the
Company’s goodwill or going-concern value.
The Company intends to
continue to conduct its ongoing litigation against VIA
Technologies, Inc. and Silicon Integrated Systems Corp.
during the Liquidation Period. A trial date has been set
for May 2013.
In addition, the Company may be
compelled to defend itself and its directors against
litigation initiated by its shareholders or others in
connection with the Plan of Liquidation and the winding up of
the Company. See below “Risk Factors - Uncertainty Over
Winding Up and Dissolution of the Company.
Employees
The Company has one
full-time and two part-time general and administrative
employees. The Company’s ability to retain key
employees is a critical factor to the Company’s
success.
Item
1A.
Risk
Factors
Shareholder and
Third Party Actions
While the Company’s
shareholders have approved the Plan of Liquidation, there
can be no assurances that the Company’s
shareholders and/or third parties will not take actions
that may delay or derail the Company’s winding
up and dissolution. For example, on February 9, 2012
a class action was filed in Federal District Court for
the Northern District of California alleging that the
directors of the Company breached their fiduciary
duties in approving the Plan of Liquidation and violated
Section14(a) of the Securities Exchange Act of 1934 and
Rule 14a-9 in allegedly issuing a consent
solicitation statement with the intention of obtaining
shareholder approval. The complaint also alleged that
the Company aided and abetted the directors’
breach of fiduciary duty. The Company believes that
this action was without merit. The complaint was
voluntarily dismissed without prejudice on February 24,
2012, but other actions could be taken by the same
plaintiff or others. Defending such actions
could reduce the assets of the Company available for
distribution to its shareholders.
Challenges to
Plan of Liquidation
Despite the approval of
the Company’s shareholders of the Plan of
Liquidation, certain shareholders may attempt to
challenge implementation of the Plan. In addition,
shareholders may petition a California Superior Court
to take jurisdiction over the dissolution of the Company,
resulting in uncertainty as to the method and timing
of the Company’s dissolution and future
distributions. There can be no assurance that
the dissolution will proceed smoothly or on time as a
result of future events.
Uncertainty of
Future Distributions to Shareholders
The amount and frequency
of future distributions to shareholders depend upon a
number of factors including, but not limited to, the
Company’s ability to achieve future revenues from its
pending patent infringement litigation and the amount
of the Company’s operating costs. Certain
shareholders may attempt to challenge implementation
of the Plan, as indicated by the litigation noted
above. Accordingly, there can be no assurance
regarding the amount or frequency of future distributions
or whether they may occur at all.
Takeover
Attempts
Since the Company’s
only assets are cash and the pending litigation, the
Company may become a target for potential takeover
attempts. However, the Company believes that pursuant
to applicable California law, any attempt to reverse
the Company’s election to wind up and dissolve after
the initial liquidating distribution would be very
difficult, if not impossible, to achieve.
Lengthy
Winding-Up Period
The Company’s final
liquidating distribution is not anticipated to be made
until on or about March 31, 2016. Aside from
potentially prevailing in its pending litigation against
VIA and SIS referred to below, the Company does not
anticipate any revenue during the Company’s winding
up period. However, the Company is subject to claims,
both known and unknown, during the winding up
period which may adversely affect future distributions
to shareholders.
Shareholders
Liability for Debts Not Paid or Provided For
Shareholders may be liable
for claims with respect to the Company’s debts and
liabilities which were not adequately paid or provided
for, even if such debts and liabilities are unknown.
Shareholder liability is limited to the lesser of each
shareholder’s pro rata share of the claim or to the
amount of corporate assets distributed to it.
Claims against shareholders may be commenced before
the expiration of the applicable statute of
limitations or within 4 years of the Company’s final
dissolution, whichever is earlier.
Uncertain
Outcome of VIA and SIS Legal Actions
On August 2, 2010, the
Company announced that it had filed a patent infringement
lawsuit on July 30, 2010, in the United States
District Court for the Eastern District of Texas against
VIA Technologies, Inc. (“VIA”) and Silicon
Integrated Systems Corp. (“SIS”) for
infringement of two U.S. patents. The two
patents at issue in the lawsuit are U.S. Patent No.
5,710,906 and U.S. Patent No. 6,405,291; both entitled
“Predictive Snooping of Cache Memory for
Master-Initiated Accesses”. The complaint
alleges that VIA and SIS infringe the patents by making,
selling, and offering for sale CPUs and core logic
products based on and incorporating Predictive Snooping
technology and inducing and contributing to the
infringement of the patents by others. OPTi has
requested a jury trial in this matter. The Company, in
its case against VIA and SIS, is seeking damages or other
monetary relief, including pre-judgment interest and
awarding OPTi’s attorney fees. A trial date has
been set for May 2013. The outcome in the VIA
and SIS legal actions could have significant effects on the
Company’s distributions to its shareholders
which cannot be predicted.
No
Additional Infringement Claims Likely
As noted above, the
Company has only one legal action pending, and the Company
does not anticipate initiating any other infringement
claims in the future.
Uncertain
Revenue Stream
Although the Company has
commenced legal action against VIA and SIS relating to
the unauthorized use of its intellectual property,
there can be no assurances whether or when
revenues will result from the pursuit of such claims.
It is possible the Company’s announced liquidation
could negatively affect the amount and timing of
recovery on such claims.
OTC
Bulletin Board
The Company’s common
stock is currently traded on the OTC Bulletin Board. Some
investors may be less likely to invest in stocks that
are not traded on recognized national markets and
listing services such as NASDAQ. Therefore, investors
in our common stock may experience reduced
liquidity when attempting to trade shares of our
common stock. Approval of the Plan of Liquidation could
also reduce liquidity in the Company’s common
stock because investors may not be interested in buying
shares of a company in liquidation with limited future
prospects.
Limited
Trading Volume
Daily trading volume in
our shares has varied from zero to over one hundred
thousand shares during the last two years. Therefore,
investors in our stock may find liquidity in our shares to
be limited and difficult to predict. Liquidity in the
Company’s shares may be further reduced due to the
Company’s announcement of its liquidation and
payment of the initial liquidating distribution.
Volatility of
Stock Price
There can be no assurances
as to the Company’s operating results in any given
period. The Company expects that the trading
price of its common stock will continue to be subject to
significant volatility. It is likely that the
Company’s planned distribution will result in a
reduction in the trading price of its common
stock.
Item 2.
Properties
The Company is headquartered
in Los Altos, California, where it leases administrative
facilities in one location consisting of an aggregate of
approximately 1,575 square feet. The lease expires in
January 2014. The Company believes that it will have the
ability to either renew the lease in its existing facility or
find alternative space once the lease expires.
Item 3.
Legal Proceedings
On August 2, 2010, the
Company announced that it had filed a patent infringement
lawsuit on July 30, 2010, in the United States District Court
for the Eastern District of Texas against VIA Technologies,
Inc. (“VIA”) and Silicon Integrated Systems Corp.
(“SIS”) for infringement of two U.S. patents. The
two patents at issue in the lawsuit are U.S. Patent No.
5,710,906 and U.S. Patent No. 6,405,291, both entitled
“Predictive Snooping of Cache Memory for
Master-Initiated Accesses”. The complaint alleges that
VIA and SIS infringe the patents by making, selling, and
offering for sale CPUs and core logic products based on and
incorporating Predictive Snooping technology and inducing and
contributing to the infringement of the patents by others.
OPTi has requested a jury trial in this matter. The Company,
in its case against VIA and SIS, is seeking damages or other
monetary relief, including pre-judgment interest and awarding
OPTi’s attorney fees. A trial date has been set for May
2013.
The outcome in the VIA and
SIS legal actions could have significant effects on the
Company’s distribution to its shareholders which cannot
be predicted.
On February 9, 2012, a
shareholder class action was filed in the United States
District Court for the Northern District of California
alleging that the Company’s directors breached their
fiduciary duties in approving the Plan of Liquidation and
violated Section 14(a) of the Securities Exchange Act of 1934
and Rule 14a-9 in allegedly issuing a consent solicitation
statement with the intention of obtaining shareholder
approval. The complaint also alleged that the Company aided
and abetted in the director’s breach of fiduciary
duties. The Company and directors believe that this action
was without merit. The complaint was voluntarily dismissed
without prejudice on February 24, 2012. (See “Risk
Factors – Shareholder and Third Party Actions).
Item
4.
Mine
Safety Disclosures
Not applicable.
PART II
Item
5.
Market
for Registrant’s Common Stock, Related Stockholder
Matters and Issuer Purchases of Equity Securities
The following required
information is filed as a part of this Report:
The
Company did not issue any cash dividends on its common stock
in fiscal year 2012. During fiscal year 2011 the Company
paid cash dividends of $0.75 and $0.65 per share,
respectively, on each share of the Company’s common
stock, equal to approximately $16.3 million.
The Company’s common
stock traded on the NASDAQ National Market until May 25,
2004. Its common stock is traded on the OTC Bulletin Board
under the ticker symbol “OPTI”. The following
table sets forth the range of high and low closing prices for
the Common Stock:
Common stock price per
share:
|
Quarterly Period
Ended
|
||||
June 30
|
September 30
|
December 31
|
March 31
|
||
Fiscal 2012
|
|||||
High
|
$2.08
|
$1.85
|
$1.76
|
$1.70
|
|
Low
|
$1.80
|
$1.59
|
$1.50
|
$1.51
|
|
Fiscal 2011
|
|||||
High
|
$4.20
|
$3.92
|
$3.17
|
$2.35
|
|
Low
|
$3.34
|
$2.55
|
$2.17
|
$2.02
|
As of June 14, 2012, there
were approximately 93 holders of record of the
Company’s common stock.
The Company did not
repurchase any of its equity securities during fiscal 2012
and does not currently intend to do so in the future.
Item
6.
Selected
Financial Data
Smaller reporting companies
are not required to provide the information required by this
Item.
Item
7.
Management’s
Discussion and Analysis of Financial Condition and Results
of Operations
Information
set forth in this report constitutes includes forward-looking
statements made within the meaning of Section 27A of the
Security Act of 1933, as amended and Section 21E of the
Securities Exchange Act of 1934, as amended that involve
risks and uncertainties. The Company’s actual
results may differ significantly from the results discussed
in the forward-looking statements as a result of a number of
factors, including the Company’s ongoing efforts to
enforce its intellectual property rights, its current
litigation efforts and the uncertainty inherent in such
litigation, and the effects of the implementation of its Plan
of Liquidation.
Readers
are encouraged to refer to “Risk
Factors.”
Subsequent to the end of the
fiscal year, on May 31, 2012, the shareholders of OPTi, Inc.
(“OPTi” or the “Company”) approved a
Plan of Liquidation pursuant to which the Company will wind
up and dissolve. The Company anticipates that its liquidation
will be complete by March 31, 2016. During the winding up
period, the Company will cease to carry on business except to
the extent necessary for the beneficial winding up thereof
and except as to preserve the Company’s goodwill or
going-concern value.
On June 4, 2012, the Company
announced a cash distribution of $1.10 per share of the
Company’s stock pursuant to the Plan of Liquidation.
The distribution is to be payable on July 3, 2012 to
shareholders of record as of the close of business on June
26, 2012.
See Item 3. “Legal
Proceedings” above.
Critical
Accounting Policies
General. – Our discussions and
analysis of our financial condition and results of operations
are based upon our consolidated financial statements, which
have been prepared in accordance with accounting principles
generally accepted in the United States. The preparation of
these financial statements requires that we make estimates
and judgments that affect the reported amounts of assets,
liabilities, revenues and expenses, and related disclosure of
contingent assets and liabilities. On an on-going basis, we
evaluate our estimates based on historical experience and on
various other assumptions that we believe to be reasonable
under the circumstances, the results of which form the basis
for making judgments about the carrying values of assets and
liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates under
different assumptions or conditions.
We believe that of the
significant accounting policies used in preparation of our
consolidated financial statements (see Note 1 of Notes to
Consolidated Financial Statements) the following are critical
accounting policies, which may involve a higher degree of
judgment and complexity.
Revenue
Recognition. – Revenue from license
arrangements is recognized when persuasive evidence of an
arrangement exists, delivery has occurred and there are no
future performance obligations, fees are fixed or
determinable and collectability is reasonably assured.
Royalties are recorded as revenue when earned and
collectability is reasonably assured.
Litigation and
Contingencies. – From time to time, we
receive various inquiries or claims in connection with patent
and other intellectual property rights. We estimate the
probable outcome of these claims and accrue estimates of the
amounts that we expect to pay upon resolution of such
matters, if needed. Should we not be able to secure the terms
we expect, these estimates may change and may result in
increased accruals, resulting in decreased profits.
Results
of Operation
2012 Compared
to 2011 –
The Company recorded $240,000 of net sales during the fiscal
year ended March 31, 2012 (“fiscal year 2012”) as
compared to $50,625,000 of net sales during the fiscal year
ended March 31, 2011 (“fiscal year 2011”). This
decrease in net sales was attributable to higher licensing
revenue as the Company entered into licensing agreement with
AMD, Apple and additional companies during the fiscal year
ended March 31, 2011 versus only the licensing agreement with
Allied Security Trust in fiscal year 2012. The
Company’s future revenues depend on the success of our
current litigation with VIA and SIS.
Gross margin for fiscal year
2012 and fiscal year 2011 was 100%. This gross margin is
attributable to the Company’s revenue in fiscal year
2012 and fiscal year 2011 relating entirely to license and
settlement revenue, which had no associated costs.
Selling, general and
administrative (“SG&A”) expenses for fiscal
year 2012 were $2.9 million as compared to $5.1 million for
fiscal year 2011. This represented an approximate 44%
decrease in SG&A expenses year over year. This decrease
was primarily related to decreased costs associated with the
litigation and arbitration cases against AMD, Apple, Compact
ISA defendants and NVIDIA, during 2011.
Net interest and other
income for fiscal year 2012 was $13,000 as compared to
$12,000 in fiscal year 2011. The increase in net interest and
other income in fiscal year 2012, as compared to fiscal year
2011, was primarily higher average cash balances during the
period.
The Company recognizes
income taxes under the liability method. Deferred income
taxes are recognized for differences between the financial
reporting and tax bases of assets and liabilities at enacted
statutory tax rates in effect for the years in which the
differences are expected to reverse. The effect on deferred
taxes of a change in tax rates is recognized in income in the
period that includes the enactment date.
Liquidity
and Capital Resources
In fiscal year 2012, the
Company used approximately $3.8 million in operating
activities primarily related to the operating loss of the
Company, an increase in income tax receivable and a reduction
in accrued employee expenses, offset in part, by a decrease
in tax valuation allowance. In fiscal year 2011, the Company
provided approximately $38.5 million in operating activities
primarily related to the operating income of the Company and
release of tax valuation allowance, offset in part, by a
decrease in accounts payable.
The Company had
insignificant investment activities in fiscal year 2012 and
2011, making only $8,000 and $4,000 in purchases of property
and equipment, respectively.
The Company had no financing
activity during the fiscal year ended March 31, 2012. The
Company used approximately $16.3 million in financing
activities in fiscal year 2011, related to cash
dividends.
As of March 31, 2012, the
Company’s principal sources of liquidity included
working capital of approximately $23.0 million, of which cash
and cash equivalents comprised approximately $21.9 million.
The Company believes that the existing sources of liquidity
will satisfy the Company’s projected working capital
and other cash requirements through at least the next twelve
months.
Off
Balance Sheet Arrangements
None
Item 8.
Financial Statements and
Supplementary Data
The Company’s
financial statements and the report of the independent
registered public accounting firm appear on pages F-1 through
F-14 of this Report.
Item 9.
Changes in and
Disagreements with Accountants on Accounting and Financial
Disclosures
None.
Item 9A.
Controls and
Procedures
(a)
We carried out an
evaluation, under the supervision and with the
participation of our management, including our Chief
Executive Officer and our Chief Financial Officer, of the
effectiveness of the design and operation of our disclosure
controls and procedures pursuant to Exchange Act Rules
13a-14 and 13a-15 as of the end of the Company’s
fiscal year ended March 31, 2012. Based upon that
evaluation, our Chief Executive Officer along with our
Chief Financial Officer concluded that our disclosure
controls and procedures are effective at the reasonable
assurance level.
(b)
There have been no
significant changes (including corrective actions with
regard to significant deficiencies or material weaknesses)
in our internal controls or in other factors that could
significantly affect these controls subsequent to the date
of the evaluation referenced in paragraph (a) above.
We intend to review and
evaluate the design and effectiveness of our disclosure
controls and procedures on an ongoing basis and to improve
our controls and procedures over time and to correct any
deficiencies that we may discover in the future. Our goal is
to ensure that our senior management has timely access to all
material financial and non-financial information concerning
our business. While we believe the present design of our
disclosure controls and procedures is effective to achieve
our goal, future events affecting our business may cause us
to significantly modify our disclosure controls and
procedures.
There were no changes in our
internal controls over financial reporting during our last
quarter that have materially affected, or are reasonably
likely to materially affect, our internal control over
financial reporting.
MANAGEMENT’S
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Internal
control over financial reporting refers to the process
designed by, or under the supervision of our CEO and CFO and
effected by our board of directors, management and other
personnel, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with
generally accepted accounting principles, and includes those
policies and procedures that:
(1)
|
Pertain
to the maintenance of records that in reasonable detail
accurately and fairly reflect the transactions and
dispositions of the assets of the Company;
|
(2)
|
Provide
reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements
in accordance with generally accepted accounting
principles, and that receipts and expenditures of the
Company are being made only in accordance with
authorizations of management and directors of the
Company; and
|
(3)
|
Provide
reasonable assurance regarding prevention and timely
detection of unauthorized acquisition, use or
disposition of the Company’s assets that could
have a material effect on the financial
statements.
|
Management
is responsible for establishing and maintaining adequate
internal control over financial reporting for the Company.
Internal control over financial reporting cannot provide
absolute assurance of achieving financial reporting
objectives because of its inherent limitations. Internal
control over financial reporting is a process that involves
human diligence and compliance and is subject to lapses in
judgment and breakdowns resulting from human failures.
Internal control over financial reporting also can be
circumvented by collusion or improper management override.
Because of such limitations, there is a risk that material
misstatements may not be prevented or detected on a timely
basis by internal control over financial reporting. However,
these inherent limitations are known features of the
financial reporting process. Therefore, it is possible to
design into the process safeguards to reduce, though not
eliminate, this risk.
Under
the supervision and with the participation of our management,
including our principal executive officer and principal
financial officer, we conducted an evaluation of the
effectiveness of our internal control over financial
reporting based on the framework set forth in “Internal
Control — Integrated Framework” issued by the
Committee of Sponsoring Organizations of the Treadway
Commission. Based on our evaluation under the framework set
forth in “Internal Control — Integrated
Framework,” our management concluded that our internal
control over financial reporting was effective as of March
31, 2012. This annual report does not include disclosure of
an attestation report of the Company’s registered
public accounting firm regarding internal control over
financial reporting. Management’s report was not
subject to attestation by the Company’s registered
public accounting firm pursuant to temporary rules of the SEC
that permit the Company to provide only management’s
annual report.
Bernard Marren
|
Mike Mazzoni
|
Chief
Executive Officer
|
Chief
Financial Officer
|
Item
9B.
Other
Information
None
PART
III
Directors and Executive Officers of the
Registrant
The directors and executive officers of the Company, as
of June 15, 2012, were as follows:
Name
|
Age
|
Position
with the Company
|
Bernard T. Marren
|
76
|
President, Chief Executive Officer and Chairman
of the Board
|
Michael F. Mazzoni
|
49
|
Chief Financial Officer and Secretary
|
Kapil K. Nanda (1)(2)(3)(4)
|
66
|
Director
|
William H. Welling (1)(2)(3)(4)
|
78
|
Director
|
(1)
|
Member of the Audit Committee.
|
(2)
|
Member of the Compensation Committee.
|
(3)
|
Member of the Nominating Committee.
|
(4)
|
Independent Director
|
All board members serve until the next annual meeting
of shareholders when they are either re-elected or their
successors are elected.
Bernard T. Marren
has served as President and Chief Executive Officer of
the Company since May 1998. Mr. Marren was elected as a
director in May 1996. He also founded and was the first
President of SIA (the Semiconductor Industry Association).
Mr. Marren is currently a director at several privately-held
companies. Mr. Marren also served as a director at Infocus
Corporation, until its sale in 2009, and Microtune, Inc.
until its sale in 2010. We believe that Mr. Marren is
qualified to sit on our Board because he is the President and
Chief Executive Officer of the Company and has served in that
role for the past fourteen years.
Michael F. Mazzoni
has served as Chief Financial Officer since December
2000. Mr. Mazzoni also served with the Company from October
1993 to December 1999. The last two years prior to his
departure Mr. Mazzoni served as its Chief Financial Officer.
Mr. Mazzoni also served as Chief Financial Officer of Horizon
Navigation, Inc., a privately held, car navigation company,
from January 2003 to June 2005. Prior to rejoining the
Company, Mr. Mazzoni was Chief Financial Officer of Xpeed,
Inc., a startup in the Digital Subscriber Line CPE business,
from January 2000 to November 2000. Mr. Mazzoni has over
twenty five years of experience in the accounting and finance
areas for technology companies and has been with the Company
for approximately eighteen years. In that time, Mr. Mazzoni
has accumulated significant knowledge of the Company’s
intellectual property and licensing activities.
Kapil K. Nanda was
elected as a director in May 1996. Mr. Nanda is currently
President of InfoGain Corporation, a software and development
consulting company, which he founded in 1990. Mr. Nanda
holds a B.S. in Engineering from the University of Punjab,
India, an M.S. in Engineering from the University of Kansas,
and an M.B.A. from the University of Southern California. Mr.
Nanda's years of management experience with technology
companies provide the Company and the Board demonstrated
senior level management ability and critical industry and
technology insights.
William H. Welling
was elected as a director in August 1998. He is
currently Chairman and CEO of @Comm Corporation, a
telecommunications software company. In August 2001, @Comm
Corporation filed for protection under Chapter 11 of the
Federal Bankruptcy Code. Mr. Welling also serves as a
director on the
boards of several private companies. The Company
believes that Mr. Welling’s management experience with
technology companies makes him an excellent candidate as a
member of the Board.
There are no family relationships among any of our
directors or executive officers.
Audit
Committee Financial Expert. The
Company’s Board has not determined whether one of the
members of its audit committee qualifies as an audit
committee financial expert as set forth in Item 401(h) of
Regulation S-K of the rules promulgated by the SEC.
Each of the members of the Company’s audit committee
met the standards for audit committee membership set forth
in the NASDAQ Marketplace Rules when they were selected for
the committee by the Board. In light of the nature of
the Company’s business, the Company believes that its
audit committee, as presently constituted, possesses the
skills and experience necessary to oversee the work of the
Company’s independent registered Public accounting
firm and carry out the duties set forth in the
Company’s audit committee charter.
Code
of Ethics. The
Company has adopted a code of ethics that applies to its
chief executive officer and its chief financial officer in
accordance with Item 406 of Regulation S-K. A copy of
the code of ethics was included in the exhibit list to the
Company’s Form 10-K filed for the year ended March 31,
2004 and is incorporated herein by reference.
Section 16(a) of the Securities Exchange Act of 1934
requires the Company’s officers and directors, and
persons who own more than 10% of a registered class of the
Company’s equity securities, to file certain reports
regarding ownership of, and transactions in, the
Company’s securities with the SEC and with NASDAQ.
Such officers, directors and 10% shareholders are also
required by SEC rules to furnish the Company with copies of
all Section 16(a) forms that they file.
Based solely on its review of copies of Forms 3 and 4
and amendments thereto furnished to the Company pursuant to
Rule 16a-3(e) and Forms 5 and amendments thereto furnished to
the Company with respect to the last fiscal year, the Company
believes that, during the last fiscal year, all Section 16(a)
filing requirements applicable to the Company’s
officers, directors and 10% shareholders were complied
with.
Item
11.
Executive
Compensation
Compensation
Discussion and Analysis
Introduction
The primary objectives of
our executive compensation plan are to:
▪
|
align the financial
interests of our executives with those of our
shareholders;
|
▪
|
motivate and retain
the executive talent required to successfully implement
our business strategy; and
|
▪
|
provide incentives for
achieving our short-term and long-term goals.
|
To achieve these objectives,
our Compensation Committee establishes and reviews
compensation packages for our executive officers on an annual
basis, consisting of a combination of salary and cash
bonus.
The Compensation Committee
meets outside the presence of all of our executive officers
to consider appropriate compensation for our CEO. For
our other executive officer, the Compensation Committee meets
outside the presence of such executive officer.
The Compensation Committee
considers the recommendations of management when establishing
compensation for our executive officers, but relies upon its
own judgment to determine each individual’s
compensation. Factors that affect the Compensation
Committee’s judgment include each individual’s
performance and scope of responsibilities, as well as overall
Company performance.
Elements
of Executive Compensation
Executive compensation
consists of the following elements:
Base
Salary. Base salaries
for our executives are established based on the scope of
their responsibilities, and taking into account the
Company’s budget guidelines, labor market conditions,
and competitive market compensation paid by other companies
for similar positions. Base salaries are reviewed and
adjusted annually, to realign salaries with the market after
taking into account individual responsibilities, performance
and experience.
Discretionary
Bonus. Bonus targets
are based on a percentage of the executive’s base
salary. The bonus plan allows the payment of up to 20% of the
executive salary as a target bonus amount. The bonus is
ordinarily paid in a single installment following the
completion of a given fiscal year. The individual performance
objectives tend to be keyed to the company’s goals in
regard to licensing its intellectual property. The
Compensation Committee did not recommend any discretionary
bonuses for Mr. Marren and Mr. Mazzoni during fiscal
2012.
Change of
Control Bonus. Mr.
Marren’s and Mr. Mazzoni’s employment agreements
provide for a change of control bonus (which is defined in
their respective agreements) to be paid to them in the event
of a change of control transaction while each executive is
employed by the Company, provided that the executive signs an
irrevocable general release of all claims against the
Company. Upon such a change of control, the Shareholder
Return Bonus program would immediately cease, and Mr. Marren
and Mr. Mazzoni would instead be entitled to receive a change
of control bonus.
Shareholder
Return Bonus.
Currently, the Company has a Shareholder Return Bonus program
under which Mr. Marren and Mr. Mazzoni receive a percentage
of all monies returned to the shareholders of the Company or
if the Company determines not to distribute any third party
payments from its intellectual property strategy within six
months of receiving that payment. The compensation ranges
from 1% to 5% of the amount received from third party
payments from the intellectual property strategy. During
fiscal year 2012, the Company awarded Mr. Marren and Mr.
Mazzoni $4,320 and $2,880, respectively, under the
Shareholder Return Bonus plan, from third party payments
which were either distributed to shareholders, in the form of
dividends, or were not distributed to
shareholders. During fiscal 2011, the Company awarded
Mr. Marren and Mr. Mazzoni $1,032,401 and $688,268,
respectively, under the Shareholder Return Bonus plan.
Stock
Options. The Company does not currently
grant stock options to its Executive Officers, as it believes
that the bonus programs better align the goals of management
and the shareholders of the Company.
Other
Compensation. All of our executives are eligible
to participate in our employee benefit plans, including
medical, dental and 401(k) plans. These plans are available
to all full-time employees and do not discriminate in favor
of executive officers.
Employment
Agreements. During
fiscal year 2007 the Compensation Committee determined that
it would be appropriate to enter into employment agreements
with Mr. Marren and Mr. Mazzoni, primarily in order to
document the provisions of the Shareholder Return Bonus
program, adjust certain of the payment thresholds and address
program award payments under particular circumstances. The
shareholders of the Company, at the November 27, 2007 annual
meeting, approved the employment agreements for Mr. Marren
and Mr. Mazzoni.
Final
Analysis. Our current
strategic objectives for executive compensation are to
compensate our executives fairly and competitively in return
for their devoted efforts, and to avoid having the
compensation program interfere with what the Company
considers (a) an ongoing trend of meaningful progress toward
achievement of the OPTi’s business objectives and
(b) its incentivized, dedicated, collaborative
management environment that is already in place.
Summary
Compensation Table
The following table sets
forth information concerning compensation earned for services
rendered to us by the Chief Executive Officer and the Chief
Financial Officer for fiscal years 2012 and 2011.
Collectively, these are the “Named Executive
Officers”:
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
(i)
|
(j)
|
Name
and Principal
Position
|
Year
|
Salary
|
Bonus(1)
|
Stock
Awards
|
Option
Awards
(2)
|
Non-Equity
Compensa-
tion
Incentive
Plan
Comp.(3)
|
Change
in
Pension
Value and
NQ
Deferred
Comp.
|
All
Other
Compensa-tion
|
Total
|
Bernard T.
Marren
Chief
Executive Officer - CEO
|
2012
|
$166,911
|
-
|
-
|
-
|
4,320
|
-
|
$11,155(4)
|
$182,386
|
2011
|
$158,963
|
-
|
-
|
-
|
1,032,401
|
-
|
$10,899(4)
|
$1,202,263
|
|
Michael F.
Mazzoni
Chief
Financial Officer - CFO
|
2012
|
$116,944
|
-
|
-
|
-
|
2,880
|
-
|
- (4)
|
$119,824
|
2011
|
$111,375
|
-
|
-
|
-
|
688,268
|
-
|
$8,250(4)
|
$807,893
|
(1)
|
Column (d) is used to
record non-equity discretionary (non-performance based)
bonuses made to our officers.
|
(2)
|
This column represents
the dollar amount recognized for financial statement
reporting purposes with respect to the 2012 fiscal year
for the fair value of stock options granted to each of
the named executives, in 2012, as well as prior fiscal
years, in accordance with FASB ASC Topic 718. Pursuant
to SEC rules, the amounts shown exclude the impact of
estimated forfeitures related to service-based vesting
conditions.
|
(3)
|
The amounts in column
(g) reflect the cash awards under the Shareholder
Return Bonus, which is discussed in further detail in
the Compensation Discussion and Analysis under the
heading “ Shareholder Return Bonus”.
|
(4)
|
All Other Compensation
consisted of the 50% Company match on 401(K)
contributions.
|
Grants of
Plan-Based Awards
There were no grants of
stock or option awards to our Named Executive Officers during
fiscal 2012. Mr. Marren and Mr. Mazzoni are participants in
the Company’s Shareholder Return Bonus program which is
a multi-year non-equity incentive plan. The Company
established the plan and made Mr. Marren and Mr. Mazzoni
participants in 2005 and the plan covered their performance
during fiscal 2012 during which they earned payments under
the plan which are reflected in the Summary Compensation
Table above. However, no new awards were granted under the
plan during fiscal 2012.
Outstanding
Equity Awards at Fiscal Year-End
The Company had no
outstanding equity awards with our Named Executive Officers
as of March 31, 2012.
Option
Exercises and Stock Vested
No options were exercised or
shares of common stock acquired upon vesting by our Named
Executive Officers during the fiscal year ended March 31,
2012.
Pension
Benefits
We did not have any plans
providing for payments or other benefits at, following, or in
connection with retirement to our Named Executive Officers
(or any other employees) during fiscal 2012.
Nonqualified
Deferred Compensation
We did not permit
compensation deferral by our Named Executive Officers (or any
other employees) during fiscal 2012.
Potential
Payments Upon Termination or Change in Control
Severance and
change-in-control arrangements for Mr. Marren and Mr. Mazzoni
are included in the employment agreements approved by the
shareholders at the November 27, 2007, annual meeting.
Director
Compensation
The following table
summarizes director compensation during fiscal year
2012:
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
Director
Name(1)
|
Fees Earned or Paid in
Cash(2)
|
Stock Awards
($)
|
Option Awards (3)
(4)
|
Non-Equity Incentive
Plan Compensation ($)
|
Change in Pension
Value and Nonqualified Deferred Compensation Earnings
($)
|
All Other Compensation
($)
|
Total ($)
|
Stephen Diamond(5)
|
$34,500
|
—
|
—
|
—
|
—
|
—
|
$34,500
|
Kapil Nanda
|
$46,500
|
—
|
—
|
—
|
—
|
—
|
$46,500
|
William Welling
|
$48,000
|
—
|
—
|
—
|
—
|
—
|
$48,000
|
(1)
|
Mr. Marren is not included in this table as he is
an employee of the Company and receives no extra
compensation for his services as a Director. The
compensation received by Mr. Marren, as an employee of
the Company, is shown in the Summary Compensation Table
and the Outstanding Equity Awards at Fiscal Year-End
Table above.
|
(2)
|
As of March 31, 2012, each non-employee Director
received a $15,000 yearly retainer and a fee of $1,500
per board or committee meeting attended.
|
(3)
|
Column (d) represents the dollar amount
recognized for financial statement reporting purposes
with respect to the 2012 fiscal year for the fair value
of stock options previously granted to the directors in
prior fiscal years, in accordance with FASB ASC Topic
72 Pursuant to the SEC rules, the amounts shown exclude
the impact of estimated forfeitures related to service
based vesting conditions.
|
(4)
|
As of March 31, 2012, Mr. Nanda and William
Welling had no options outstanding. There were no
options granted during fiscal year 2012.
|
(5)
|
Mr. Diamond resigned as a member of the Board of
Directors effective November 11, 2011.
|
Compensation
Committee Interlocks and Insider Participation
The Compensation Committee consists of Messrs. Nanda
and Welling, each of whom is an independent director and
neither of whom is a current or former employee of the
Company. During 2012, none of our executive officers served
as a director or member of the Compensation Committee or any
Board committee performing equivalent functions for another
entity that has one or more executive officers serving on our
Board of Directors.
COMPENSATION
COMMITTEE REPORT
The Compensation Committee provided the following
statement:
“The Compensation Committee has reviewed and
discussed the Compensation Discussion and Analysis required
by Item 402(b) of Regulation S-K with management. Based on
these reviews and discussions, the Compensation Committee
recommended to the Board of Directors that the Compensation
Discussion and Analysis be included in the Company’s
annual report on Form 10-K and in the annual meeting proxy
statement on Schedule 14A.”
Respectfully submitted,
|
Compensation Committee of the Board of
Directors
|
William Welling, Chair
|
Kapil Nanda
|
Item
12.
Security
Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters
The following table sets forth
information regarding ownership of our Common Stock as of
March 31, 2012 (or earlier date for information based on
filings with the SEC) by (a) each person known to us to own
more than 5% of the outstanding shares of the Common Stock,
(b) each director and nominee for director, (c) our Chief
Executive Officer and Chief Financial Officer (who are our
only executive officers)and (d) all directors and executive
officers as a group. The information in this table is based
solely on statements in filings with the Securities and
Exchange Commission (the “SEC”) or other reliable
information. A total of 11,645,903 shares of our common stock
were issued and outstanding as of March 31, 2012.
Name and
Address
of Beneficial Owner
(1)
|
Number of
Shares
of Common Stock
Owned (2)
|
Number of Shares
of
Common Stock
Subject to
Options
Exercisable
Within 60 Days
(3)
|
Total Number of
Shares
of Common Stock
Beneficially Owned
(4)
|
Percent
Ownership
|
S. Muoio & Co. LLC(5)
509 Madison Ave, Ste
406
New York, NY
10022
|
4,097,088
|
—
|
4,097,088
|
35.2%
|
Raffles Associates LP (6)
450 Seventh Ave, Ste.
509
New York, NY
10123
|
716,834
|
—
|
716,834
|
6.2%
|
Weiss Asset Management
LP (7)
222 Berkeley Street,
16th Floor
Boston,, MA
02116
|
682,927
|
—
|
682,927
|
5.9%
|
Dimension Fund Advisors
Inc. (8)
1299 Ocean Avenue, 11th
Floor
Santa Monica, CA
940401
|
581,210
|
—
|
581,210
|
5.0%
|
Bernard T. Marren
|
15,788
|
—
|
15,788
|
*
|
Michael F. Mazzoni
|
—
|
—
|
—
|
*
|
Kapil Nanda
|
4,000
|
—
|
4,000
|
*
|
William Welling
|
21,333
|
—
|
21,333
|
*
|
All executive officers and
directors as a group (4 persons)
|
41,121
|
—
|
41,121
|
*
|
*
|
Represents beneficial
ownership of less than one percent (1%) of the
outstanding shares as of March 31, 2012.
|
(1)
|
Unless otherwise
indicated, the address of each of the named individuals
is c/o OPTi Inc, One First Street, Suite 14, Los Altos,
CA 94022.
|
(2)
|
Represents shares of
outstanding common stock owned by the named parties as
of March 31, 2012.
|
(3)
|
Shares of common stock
subject to stock options currently exercisable or
exercisable within 60 days of March 31, 2012 are deemed
to be outstanding for computing the percentage
ownership of the person holding such options and the
percentage ownership of any group of which the holder
is a member, but are not deemed outstanding for
computing the percentage of any other person.
|
(4)
|
The amounts and
percentages of common stock beneficially owned are
reported on the basis of regulations of the Securities
and Exchange Commission governing the determination of
beneficial ownership of securities. Under the rules of
the Commission, a person is deemed to be a
“beneficial owner” of a security if that
person has or shares “voting power,” which
includes the power to vote or to direct the voting of
such security, or “investment power,” which
includes the power to dispose of or to direct the
disposition of such security. A person is also deemed
to be a beneficial owner of any securities for which
that person has a right to acquire beneficial ownership
within 60 days.
|
(5)
|
Information on holdings of S. Muoio & Co LLC
(“SMC”) is taken from a Form 4 filed on
February 8, 2012. The shares listed are held in the
accounts of several investment partnerships and
investment funds (collectively, the "Investment
Vehicles") for which SMC serves as either general
partner or investment manager. Salvatore Muoio is the
managing member of SMC. SMC and Mr. Muoio may be deemed
to beneficially own the securities held by the
Investment Vehicles by virtue of SMC's position as
general partner or investment manager of the Investment
Vehicles and Mr. Muoio's status as the managing member
of SMC.
|
(6)
|
Information on holdings of Raffles Associates
L.P. is taken from a Schedule 13G/A filed on February
14, 2012. Raffles Capital Advisors LLC is the General
Partner of Raffles Associates, L.P. and Paul H.
O’Leary is the Managing Member of Raffles Capital
Advisors LLC.
|
(7)
|
Information on holdings of Weiss Asset Management
LP is taken from a form 13G filed on February 14, 2012.
Shares reported are beneficially owned by a private
investment partnership. BIP GP is the sole general
partner of the Partnership, Weiss Asset Management is
the sole investment manager to the Partnership, WAM GP
is the sole general partner of Weiss Asset Management,
and Andrew Weiss is the managing member of WAM GP and
BIP GP.
|
(8)
|
Information on holdings of Dimensional Fund
Advisors is taken from a Schedule 13G/A filed on
February 9, 2009. The shares listed are owned by
advisory clients of Dimensional Fund Advisors.
Dimensional Fund Advisors disclaims beneficial
ownership of the shares listed. Katherine Newell is
Vice President and Secretary of Dimension Fund.
|
SECURITIES
AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION
PLANS
No options are outstanding or authorized for issuance
under the Company’s equity compensation plans.
Compensation
Committee Interlocks and Insider Participation
During the last fiscal year the members of the
Compensation Committee were Messrs. Diamond, Nanda and
Welling. Mr. Diamond resigned from the Board and Compensation
Committee effective November 11, 2011. There was no
reportable compensation committee, director interlocks, or
insider participation during that period.
Related Party
Transactions
The Company’s policy is that it will not make
loans to, or enter into other transactions with directors,
officers or affiliates unless such loans or transactions are
(i) approved by the majority of the Company’s
independent disinterested directors, (ii) may reasonably be
expected to benefit the Company, and (iii) will be on terms
no less favorable to the Company than could be obtained in
arms-length transactions with unaffiliated third
parties.
Procedures for Approval of
Related Person Transactions
The Board of Directors is responsible for reviewing and
approving all material transactions with any related party.
“Related Party” means any of the
following:
─
|
A director (which term, when used, includes any
director nominee),
|
─
|
an executive officer,
|
─
|
a person known by the Company to be the
beneficial owner of more than 5% of the Company’s
common stock,
|
─
|
or a person known by the Company to be an
immediate family member of any of the foregoing.
|
“Immediate family member” means a child,
stepchild, parent, stepparent, spouse, sibling,
mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister-in-law of such director, executive
officer, nominee for director or beneficial owner, and any
person (other than a tenant or employee) sharing the
household of such director, executive officer, nominee for
director or beneficial owner.
We expect our directors, officers and employees to act
and make decisions that are in the Company’s best
interests and encourage them to avoid situations which
present a conflict between our interests and their own
personal interests. Our directors, officers and employees are
prohibited from taking any action that may
make it difficult for them to perform their duties,
responsibilities and services to the Company in an objective
and fair manner. Exceptions are only permitted in the
reasonable discretion of the Board of Directors. In addition,
we are strictly prohibited from extending personal loans to,
or guaranteeing the personal obligations of, any director or
officer.
Since the beginning of the Company’s last fiscal
year, there have been no transactions in which the Company
was or is to be a participant and in which any related person
had or will have a direct or indirect material interest, and
no such transactions are currently proposed.
Director
Independence
The Board of Directors has determined that Messrs.
Diamond, Nanda and Welling are “independent”
under the rules of the NASDAQ Stock Market, and Mr. Marren is
not. Under applicable SEC and NASDAQ rules, the existence of
certain “related party” transactions above
certain thresholds between a director and the Company are
required to be disclosed and preclude a finding by the Board
that the director is independent. Although the Board also has
the power to consider whether transactions of those types but
below the thresholds render a director not
“independent,” and to consider whether any other
types of transactions, relationships or arrangements (i.e.,
not specified in the SEC and NASDAQ rules) render a director
not “independent”, the Board did not consider any
such items in making its independence determination as to
these four directors.
The Audit Committee, Nominating Committee and
Compensation Committee are each comprised solely of
independent directors, as that term is defined by Rule 4200
of the NASDAQ Marketplace Rules. Each of
the members of the Company’s audit committee met the
standards for audit committee membership set forth in the
NASDAQ Marketplace Rules when they were selected for the
committee by the Board.
Item 14.
Principal Accountant Fees
and Services
The following table shows
the fees paid or accrued by OPTi Inc. for the audit and other
services provided by our auditors Armanino McKenna LLP for
fiscal years 2012 and 2011.
2012
|
2011
|
|
Audit Fees (1)
|
$120,535
|
$115,653
|
Audit Related
Fees
|
—
|
—
|
Tax Fees (2)
|
17,639
|
17,580
|
All Other Fees
|
97,705
|
19,600
|
Total
|
$235,879
|
$152,833
|
(1)
|
Audit fees represent
fees for professional services provided in connection
with the audit of our annual financial statements and
review of our quarterly financial statements, and
advice on accounting matters that arose during the
audit.
|
(2)
|
Tax fees consisted
primarily of income tax compliance and related
services.
|
During fiscal 2012 and 2011,
all services provided by Armanino McKenna LLP were
pre-approved by the Audit Committee.
Policy
on Audit Committee Pre-Approval of Audit and Non-Audit
Services
It is the responsibility of
the Audit Committee to approve, in accordance with Sections
10A(h) and (i) of the Exchange Act and the Rules and
Regulations of the SEC, all professional services, to be
provided to the Company by its independent registered public
accounting firm, provided that the Audit Committee shall not
approve any non-audit services proscribed by Section 10A(g)
of the Exchange Act in the absence of an applicable
exemption.
It is the policy of the
Company that the Audit Committee pre-approves all audit and
permissible non-audit services provided by the
Company’s independent registered public accounting
firm, consistent with the criteria set forth in the Audit
Committee Charter and applicable laws and regulations. The
Committee has delegated to the Chair of the Committee the
authority to pre-approve such services, provided that the
Chair shall report any decision on his part to pre-approve
such services to the full Audit Committee at its next regular
meeting. These services may include audit services,
audit-related services, tax services, and other services. The
independent registered public accounting firm and Company
management are required to periodically report to the Audit
Committee regarding the extent of services provided by the
independent registered public accounting firm pursuant to any
such pre-approval.
PART
IV
Item 15. Exhibits and
Financial Statement Schedules
(a)(1)
|
Financial
Statements
|
|||
The following financial statements are filed as
part of this Report:
|
||||
Page
|
||||
Report of Armanino McKenna LLP, Independent
Registered Public Accounting
Firm................................
|
F-1
|
|||
Consolidated Balance Sheets, March 31, 2012 and
2011……………………………………………………
|
F-2
|
|||
Consolidated Statements of Operations for the
years ended March 31, 2012 and
2011…………….............
|
F-3
|
|||
Consolidated Statements of Shareholders’
Equity for the years ended March 31, 2012 and
2011….............
|
F-4
|
|||
Consolidated Statements of Cash Flows for the
years ended March 31, 2012 and
2011……………………
|
F-5
|
|||
Notes to Consolidated Financial
Statements…………………………………………………………………
|
F-6
|
|||
(a)(2)
|
Financial
Statement Schedules
|
|||
Schedule
Number
|
Description
|
Page
|
||
None
|
Number
|
|||
All other schedules not applicable.
|
||||
(a)(3)
|
Exhibits
Listing
|
|||
Exhibit
|
||||
Number
|
Description
|
|||
3.1
|
Registrant’s Articles of Incorporation, as
amended. (1)
|
|||
3.2
|
Registrant’s Bylaws. (1)
|
|||
10.1
|
1993 Stock Option Plan, as amended. (1)
|
|||
10.2
|
1993 Director Stock Option Plan. (1)
|
|||
10.3
|
Form of Indemnification Agreement between
Registrant and its officers and directors.(1)
|
|||
10.4
|
1996 Employee Stock Purchase Plan. (2)
|
|||
10.5
|
1995 Employee Stock Option Plan, as amended.
(3)
|
|||
10.6
|
Patent License Agreement between Intel
Corporation and OPTi Inc. (4)
|
|||
10.7
|
OPTi Inc. Technology License Agreement between
OPTi Inc. and Opti Technologies Inc., dated as of
September 30, 2002. (5)
|
|||
10.8
|
Lease Agreement with John Arrillaga, Trustee, or
his Successor Trustee UTA, dated 7/20/77 (JOHN
ARRILLAGA SURVIVOR’S TRUST) as amended, dated as
of November 21, 2006 (6)
|
|||
10.9
|
Employment Agreement with Bernard T. Marren,
dated as of November 27, 2007 (7)
|
|||
10.10
|
Employment Agreement with Michael M. Mazzoni,
dated as of November 27, 2007 (7)
|
|||
10.11
|
Dismissal and License Option Agreement with
Broadcom, dated December 23, 2008 (8)
|
|||
10.12
|
Standstill and Option Agreement with Renesas
Technology Corp. and Renesas Technology America, Inc.,
dated as of January 23, 2009 (9)
|
|||
10.13
|
Settlement and License Agreement with VIA
Technologies, Inc., dated as of October 1, 2009
(10)
|
|||
10.14
|
Amendment No. 1 to Lease Agreement with John
Arrillaga, Trustee, or his Successor Trustee UTA, dated
7/20/77 (JOHN ARRILLAGA SURVIVOR’S TRUST), as
amended, dated as of December 11, 2009 (11)
|
|||
10.15
|
Litigation Settlement and License Agreement with
Advanced Micro Devices, Inc., dated as of April 30,
2010 (12)
|
|||
10.16
|
Settlement and License Agreement with Advanced
Micro Devices, Inc., dated as of April 30, 2010
(13)
|
10.17
|
Pre-Snoop Patent License and Arbitration
Settlement Agreement with NVIDIA Corporation, dated as
of September 28, 2010 (13)
10.18 Settlement and License Agreement with
Apple Inc., dated as of December 6, 2010 (14)
10.19 Patent License Agreement with Exar
Corporation, dated March 14, 2011
|
||
14.1
|
Code of Ethics (16)
|
||
24.1
|
Power of Attorney (see page 24, signature
page).
|
||
31.1
|
Section 302 Certification of Chief Executive
Officer
|
||
31.2
|
Section 302 Certification of Chief Financial
Officer
|
||
32.1
|
Section 906 Certification of Chief Executive
Officer
|
||
32.2
|
Section 906 Certification of Chief Financial
Officer
|
(1)
|
Incorporated by reference to Registrants
Statement on Form S-1 (File No. 33-59978) as declared
effective by the Securities and Exchange Commission on
May 11, 1993.
|
(2)
|
Incorporated by reference to Registration
Statement on Form S-8 (File No. 333-15181) as filed
with the Securities and Exchange Commission on October
31, 1996.
|
(3)
|
Incorporated by reference to Registration
Statement on Form S-8 (File No. 333-17299) as filed
with the Securities and Exchange Commission on December
5, 1996.
|
(4)
|
Incorporated by reference to the Annual Report on
Form 10-K for the Fiscal Year Ended December 31, 1999,
of OPTi Inc., (File No. 000-21422).
|
(5)
|
Incorporated by reference to the Current Report
on Form 8-K filed with the Securities and Exchange
Commission on October 18, 2002. (File No.
000-21422).
|
(6)
|
Incorporated by reference to the Quarterly Report
on Form 10-Q for the Quarter Ended December 31, 2006,
of OPTi Inc., (File No. 000-21422).
|
(7)
|
Incorporated by reference to the Definitive Proxy
Statement Filed Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 on October 29, 2007,
(File No. 000-21422).
|
(8)
|
Incorporated by reference to the Quarterly Report
on Form 10-Q for the Quarter Ended December 31, 2008,
of OPTi Inc., (File No. 000-21422).
|
(9)
|
Incorporated by reference to the Quarterly Report
on Form 10-Q for the Quarter Ended June 30, 2009, of
OPTi Inc., (File No. 000-21422).
|
(10)
|
Incorporated by reference to the Quarterly Report
on Form 10-Q for the Quarter Ended September 30, 2009,
of OPTi Inc., as amended, (File No. 000-21422).
|
(11)
|
Incorporated by reference to the Quarterly Report
on Form 10-Q for the Quarter Ended December 31, 2009,
of OPTi Inc., as amended, (File No. 000-21422).
|
(12)
|
Incorporated by reference to the Current Report
on Form 8-K filed with the Securities and Exchange
Commission on May 4, 2010, (File No. 000-21422).
|
(13)
|
Incorporated by reference to the Quarterly Report
on Form 10-Q for the Quarter Ended September 30, 2010,
of OPTi Inc., (File No. 000-21422).
Incorporated by reference to the Current Report
on Form 8-K filed with the securities and Exchange
Commission on December 9, 2010, (File No.
000-21422).
|
(15)
|
Incorporated by reference to the Annual Report on
Form 10-K for the Fiscal Year Ended March 31, 2005, of
OPTi Inc., (File No. 000-21422).
|
(b)
|
Exhibits.
See Item 15 (a)(3) above.
|
(c)
|
Financial Statements
Schedules. See Item 15 (a)(2)
above.
|
SIGNATURES
Pursuant to the requirements
of Section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant has duly caused this Form 10-K to be
signed on its behalf by the undersigned, thereunto duly
authorized in the City of Palo Alto, State of California on
the day of June 29, 2012.
OPTi
Inc.
|
|
By:
|
/s/ Bernard
Marren
|
Bernard Marren
|
|
Chief
Executive Officer and Chairman of the Board
|
POWER OF
ATTORNEY
KNOW ALL PERSONS BY THESE
PRESENT, that each person whose signature appears below
constitutes and appoints Bernard Marren and Michael Mazzoni
and each of them, jointly and severally, his true and lawful
attorney-in-fact, each with full power of substitution and
resubstitution, for him in any and all capacities, to sign
any and all amendments to this Annual Report on Form 10-K,
and to file the same, with all exhibits thereto and other
documents in connection therewith, with the SEC, granting
unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act
and thing requisite and necessary to be done in connection
therewith, as fully to all intents and purposes as he or she
might or could do in person, hereby ratifying and confirming
all that each said attorneys-in-fact and agents, or their
substitute or substitutes, or any of them, shall do or cause
to be done by virtue hereof.
Pursuant to the requirements
of the Securities Exchange Act of 1934, this Form 10-K has
been signed below by the persons on behalf of the Registrant
and in the capacities and on the dates indicated:
Signatures
|
Title
|
Date
|
||
/s/
BERNARD MARREN
|
President and Chief
Executive Officer and Chairman
|
June 29, 2012
|
||
Bernard Marren
|
of the Board
(Principal Executive Officer)
|
|||
/s/
MICHAEL MAZZONI
|
Chief Financial
Officer (Principal
|
June 29, 2012
|
||
Michael Mazzoni
|
Financial and
Accounting Officer)
|
|||
/s/
KAPIL K NANDA
|
Director
|
June 29, 2012
|
||
Kapil K. Nanda
|
||||
/s/
WILLIAM WELLING
|
Director
|
June 29, 2012
|
||
William Welling
|
||||
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the Board of Directors and Shareholders of
OPTi
Inc.
Los
Altos, CA
We
have audited the accompanying consolidated balance sheets of
OPTi Inc. (the "Company") as of March 31, 2012 and 2011, and
the related consolidated statements of operations,
shareholders' equity, and cash flows for the two years then
ended. These consolidated financial statements are the
responsibility of the Company's management. Our
responsibility is to express an opinion on the
consolidated financial statements based on our
audits.
We
conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is
not required to have, nor were we engaged to perform, an
audit of its internal control over financial reporting. Our
audits included consideration of internal control over
financial reporting as a basis for designing audit procedures
that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the
Company’s internal control over financial reporting.
Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements,
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In
our opinion, such consolidated financial statements present
fairly, in all material respects, the financial position of
OPTi Inc., as of March 31, 2012 and 2011, and the results of
its operations and cash flows for the two years then ended in
conformity with accounting principles generally accepted in
the United States of America.
As
described in Note 10 to the financial statements, the
shareholders of OPTi Inc. approved a Plan of Liquidation on
May 31, 2012, and the Company commenced liquidation shortly
thereafter.
/s/
Armanino McKenna, LLP
San
Ramon, California
June
29, 2012
OPTi
Inc.
|
||||
CONSOLIDATED
BALANCE SHEETS
|
||||
(In
thousands, except share amounts)
|
||||
March
31,
|
||||
2012
|
2011
|
|||
ASSETS
|
||||
Current
assets
|
||||
Cash and cash
equivalents
|
$21,922
|
$25,779
|
||
Income tax
receivable
|
1,392
|
−
|
||
Prepaid expenses and
other current assets
|
24
|
105
|
||
Deferred tax
asset
|
−
|
556
|
||
Total current
assets
|
23,338
|
26,440
|
||
Equipment
and furniture
|
||||
Office
equipment
|
32
|
62
|
||
Furniture and
fixtures
|
17
|
17
|
||
49
|
79
|
|||
Accumulated
depreciation
|
(41)
|
(70)
|
||
Equipment and
furniture, net
|
8
|
9
|
||
Other
assets
|
||||
Deposits
|
5
|
−
|
||
Non-current deferred
tax asset
|
−
|
783
|
||
Total other
assets
|
5
|
783
|
||
Total assets
|
$23,351
|
$27,232
|
||
LIABILITIES
AND SHAREHOLDERS' EQUITY
|
||||
Current
liabilities
|
||||
Accounts
payable
|
$163
|
$32
|
||
Accrued
expenses
|
204
|
211
|
||
Accrued employee
compensation
|
10
|
684
|
||
Total current
liabilities
|
377
|
927
|
||
Other
liabilities
|
||||
Non-current taxes
payable
|
3,816
|
4,098
|
||
Total current and
other liabilities
|
4,193
|
5,025
|
||
Shareholders'
equity
|
||||
Preferred stock, no
par value:
|
||||
Authorized shares -
5,000,000
|
||||
No shares issued or
outstanding
|
−
|
−
|
||
Common stock, no par
value:
|
||||
Authorized shares -
50,000,000
|
||||
Issued and
outstanding shares - 11,645,903 at March 31,
2012
|
||||
and March 31,
2011
|
13,544
|
13,544
|
||
Retained
earnings
|
5,614
|
8,663
|
||
Total shareholders'
equity
|
19,158
|
22,207
|
||
Total liabilities and
shareholders' equity
|
$23,351
|
$27,232
|
The accompanying notes are
an integral part of these consolidated financial
statements.
OPTi
Inc.
CONSOLIDATED
STATEMENTS OF OPERATIONS
(In
thousands, except per share data)
|
|||
Year
Ended March 31,
2012
|
Year
Ended March 31,
2011
|
||
Sales
|
|||
License sales
|
$240
|
$50,625
|
|
Net sales
|
240
|
50,625
|
|
Costs and
expenses
|
|||
General and
administrative
|
2,856
|
5,094
|
|
Total costs and
expenses
|
2,856
|
5,094
|
|
Operating income
(loss)
|
(2,616)
|
45,531
|
|
Interest income and
other
|
13
|
12
|
|
Income (loss) before
provision for income taxes
|
(2,603)
|
45,543
|
|
Provision for income
taxes
|
446
|
19,923
|
|
Net income
(loss)
|
$(3,049)
|
$25,620
|
|
Basic net income
(loss) per share
|
$(0.26)
|
$2.20
|
|
Shares used in
computing basic per share amounts
|
11,646
|
11,645
|
|
Diluted net income
(loss) per share
|
$(0.26)
|
$2.20
|
|
Shares used in
computing diluted per share amounts
|
11,646
|
11,645
|
The accompanying notes are
an integral part of these consolidated financial
statements.
OPTi Inc.
CONSOLIDATED
STATEMENTS OF SHAREHOLDERS’ EQUITY
(In
thousands, except share amounts)
Common Stock
|
||||||||
Shares
|
Amount
|
Retained
Earnings/ (Accumulated Deficit)
|
Total
Shareholders’ Equity
|
|||||
Balance
at March 31, 2010
|
11,641,903
|
$13,539
|
$(652)
|
$12,887
|
||||
Issuance
of common stock under stock plans
|
4,000
|
5
|
─
|
5
|
||||
Cash
dividends
|
─
|
─
|
(16,305)
|
(16,305)
|
||||
Net
income
|
─
|
─
|
25,620
|
25,620
|
||||
Balance
at March 31, 2011
|
11,645,903
|
13,544
|
8,663
|
22,207
|
||||
Net
loss
|
─
|
─
|
(3,049)
|
(3,049)
|
||||
Balance
at March 31, 2012
|
11,645,903
|
$13,544
|
$5,614
|
$19,158
|
The accompanying notes are
an integral part of these consolidated financial
statements.
OPTi
Inc.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In
thousands)
|
Year
Ended
March
31,
2012
|
Year
Ended
March
31,
2011
|
|||
Operating
activities
|
|||||
Net income
(loss)
|
$(3,049)
|
$25,620
|
|||
Adjustments to
reconcile net income (loss) to net cash provided
by (used in)
|
|||||
operating
activities:
|
|||||
Depreciation and
amortization
|
9
|
4
|
|||
Change in deferred
tax assets and non-current taxes payable
|
1,057
|
14,200
|
|||
Changes in operating
assets and liabilities:
|
|||||
Accounts
receivable
|
─
|
450
|
|||
Prepaid expenses and
other current assets
|
76
|
(63)
|
|||
Taxes
receivable
|
(1,392)
|
-
|
|||
Accounts
payable
|
131
|
(2,141)
|
|||
Accrued
expenses
|
(7)
|
(237)
|
|||
Accrued employee
expenses
|
(674)
|
672
|
|||
Net cash provided
by (used in) operating activities
|
(3,849)
|
38,505
|
|||
Investing
activities
|
|||||
Purchases of property
and equipment
|
(8)
|
(4)
|
|||
Net cash used in
investing activities
|
(8)
|
(4)
|
|||
Financing
activities
|
|||||
Cash dividends
|
─
|
(16,305)
|
|||
Sale of common
stock
|
─
|
5
|
|||
Net cash used in
financing activities
|
─
|
(16,300)
|
|||
Net increase
(decrease) in cash and cash equivalents
|
(3,857)
|
22,201
|
|||
Cash and cash
equivalents at beginning of year
|
25,779
|
3,578
|
|||
Cash and cash
equivalents at end of year
|
$21,922
|
$25,779
|
|||
Supplemental
cash flow information
|
|||||
Cash paid for income
taxes
|
$714
|
$5,792
|
The accompanying notes are
an integral part of these consolidated financial
statements.
OPTi
Inc.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 -
Summary of Significant Accounting Policies
The Company -
OPTi Inc., a California corporation, has been engaged in
licensing its intellectual property for use principally by
personal computer manufacturers and semiconductor device
manufacturers. On May 31, 2012, the Company’s
shareholders adopted a Plan of Liquidation pursuant to which
it will cease doing business (see Note 10 – Subsequent
Events).
Principles of
Consolidation - The consolidated financial
statements include the Company and its wholly-owned
subsidiaries. All significant intercompany transactions and
balances have been eliminated.
Use of Estimates
- The preparation of financial statements in accordance
with accounting principles generally accepted in the United
States requires management to make estimates and assumptions
that affect the amounts reported in the financial statements
and accompanying notes. Actual results could differ from
those estimates.
Cash and Cash
Equivalents - The Company considers all highly
liquid investments purchased with an original maturity of
three months or less to be cash equivalents. Cash equivalents
are carried at cost, which approximates fair value. At March
31, 2012 and 2011 substantially all cash and cash equivalents
consisted of money market accounts.
Income
Taxes - Income taxes
are calculated under Accounting Standard Codification Topic
740 “Accounting for Income Taxes”. Under ASC 740,
the liability method is used in accounting for income taxes,
which includes the effects of deferred tax assets or
liabilities. Deferred tax assets or liabilities are
recognized for the expected tax consequences of temporary
differences between the financial statement and tax bases of
assets and liabilities using the enacted tax rates that will
be in effect when these differences reverse. The Company
provides a valuation allowance to reduce deferred tax assets
to the amount that is expected, based on whether such assets
are more likely than not to be utilized.
Property and
Equipment - Property and equipment are stated at
cost, less accumulated depreciation and amortization.
Depreciation is computed by the straight-line method over the
estimated useful lives of the assets, ranging from two to
five years.
Revenue
Recognition - Revenue
from license arrangements is recognized when persuasive
evidence of an arrangement exists, delivery has occurred and
there are no future performance obligations, fees are fixed
or determinable and collectability is reasonably assured.
Royalties are recorded as revenue when earned and
collectability is reasonably assured.
Net Income Per Share
- Basic net income per share is computed on the basis
of the weighted-average number of shares outstanding for the
reporting period. The Company has computed weighted-average
shares outstanding for all of the periods presented. Diluted
income per share is computed on the basis of the
weighted-average number of shares plus dilutive potential
common shares outstanding using the treasury method.
Recent
Accounting Pronouncements
In January 2010, the
Financial Accounting Standards Board (FASB) issued
Accounting Standards Update (ASU) 2010-06, "Improving
Disclosures About Fair Value Measurements" (ASU 2010-06),
which amends the Fair Value Measurements and Disclosures
Topic of the ASC (ASC Topic 820). ASU No. 2010-06 provides
additional disclosure requirements on the transfers of assets
and liabilities between Level 1 (quoted prices in active
market for identical assets or liabilities) and Level 2
(significant other observable inputs) of the fair value
measurement hierarchy, including the reasons for and the
timing of the transfers. Additionally, the guidance requires
a roll forward of activities on purchases, sales, issuance,
and settlements of the assets and liabilities measured using
significant unobservable inputs (Level 3 fair value
measurements). This standard is effective for interim and
annual reporting periods beginning after December 15, 2009
with the exception of disclosures regarding the purchase,
sale, issuance, and settlement of Level 3 fair value measures
which are effective for fiscal years beginning after December
15, 2010. The adoption of this standard did not have a
material effect on the Company’s consolidated financial
statements.
Note 2 -
Shareholders’ Equity
Preferred
Stock
The Board of Directors has authority to issue up to
5,000,000 shares of Preferred Stock in one or more series and
to fix the rights, preferences, privileges, qualifications,
limitations and restrictions thereof, including dividend
rights, dividend rates, conversion rights, voting rights,
terms of redemption, redemption prices, liquidation
preferences and the number of shares constituting any series
or the designation of such series, without any further vote
or action by the shareholders. The Company has never issued
preferred stock nor does it anticipate doing so.
Stock
Option Plans
No options were granted during fiscal years 2012 and
2011.
1993
Director Stock Option Plan
In February 1993, the Company adopted the 1993 Director
Stock Option Plan (the “Director Plan”) and
reserved 50,000 shares of common stock for issuance
thereunder. Under this plan, non-employee directors are
granted options to purchase common stock at 100% of fair
market value on dates specified in the plan. The options
generally vest over four years from the date of grant and
expire ten years from the date of grant. In May 1996, the
Company’s shareholders authorized an additional 50,000
shares for grant under the plan.
The
activity under the 1993 Director Plan is as follows:
Outstanding
|
|||
Shares
|
Weighted
Ave. Exercise Price Per Share
|
||
Outstanding at March
31, 2010
|
8,000
|
$2.01
|
|
Exercised in
2011
|
(4,000)
|
$1.27
|
|
Outstanding at March
31, 2011
|
4,000
|
$2.74
|
|
Options cancelled in
2012
|
(4,000)
|
$2.74
|
|
Outstanding at March
31, 2012
|
─
|
$─
|
As of March 31, 2012 no stock options were outstanding.
As of March 31, 2011, there were 4,000 options outstanding
and exercisable. The weighted average exercise price for the
exercisable shares as of March 31, 2011 was $2.74.
Stock
Options Outstanding and Stock Options Exercisable:
No options were outstanding
or exercisable as of March 31, 2012.
Activity
under our Stock Option Plans is summarized as follows:
Number
of Shares
|
Weighted Average
Per Share Exercise Price
|
Weighted Average
Remaining Contractual Life (in years)
|
Aggregate Intrinsic
Value (in thousands)
|
|
Outstanding at April
1, 2011
|
4,000
|
$2.74
|
||
Outstanding at March
31, 2012
|
─
|
─
|
─
|
─
|
Exercisable at March
31, 2012
|
─
|
─
|
─
|
─
|
There were no options
granted during the fiscal years ended March 31, 2012 and
2011.
Common
Stock Reserved
At March 31, 2012, the Company has no reserved shares
of common stock for future issuance.
Note
3 - Net Income Per Share
Basic net income per share per share is computed by
dividing net income by the weighted average number of common
shares outstanding during the period. Diluted net income per
share is computed by dividing net income by the weighted
average number of common shares if all convertible securities
were converted into common stock.
The following table sets
forth the computation of basic and diluted net income (loss)
per share (in thousands, except per share amounts):
Year
Ended March 31,
|
||
2012
|
2011
|
|
Net income
(loss)
|
$(3,049)
|
$25,589
|
Weighted average
number of common shares outstanding
|
11,646
|
11,645
|
Basic net income
(loss) per share
|
$(0.26)
|
$2.20
|
Weighted average
number of common shares outstanding
|
11,646
|
11,645
|
Effect of dilutive
securities:
|
||
Employee stock
options
|
−
|
−
|
Denominator for
diluted net income (loss) per share
|
11,646
|
11,645
|
Diluted net income
(loss) per share
|
$(0.26)
|
$2.20
|
Note
4 – Cash and Equivalents
The following is a summary
as of March 31, 2012 and 2011 (in thousands):
March
31,
|
March
31,
|
||
2012
|
2011
|
||
Cash
|
$100
|
$100
|
|
Money Market
|
21,822
|
25,679
|
|
Total
|
$21,922
|
$25,779
|
The
accounting standard for fair value establishes a framework
for measuring fair value and requires disclosures about fair
value measurements by establishing a hierarchy that
prioritizes the inputs to valuation techniques used to
measure fair value. The hierarchy gives the highest priority
to unadjusted quoted prices in active markets for identical
assets or liabilities (Level 1 measurements) and lowest
priority to unobservable inputs (Level 3 measurements). The
three levels of the fair value hierarchy are described
below:
Level
I
|
─
|
observable
inputs such as quoted prices in active markets;
|
Level
II
|
─
|
inputs
other than the quoted prices in active markets that are
observable either directly or indirectly; and
|
Level
III
|
─
|
unobservable
inputs in which there is little or no market data,
which requires the Company to develop its own
assumptions. This hierarchy requires the Company to use
observable market data, when available, and to minimize
the use of unobservable inputs when determining fair
value. On a recurring basis, the Company measures its
investments and marketable securities at fair
value.
|
As
of March 31, 2012 and March 31, 2011, the Company had cash
and investments in money market funds of $21.9 million and
$25.7 million, respectively, in cash equivalents classified
as Level I in the fair value hierarchy and no Level II or
Level III investments.
Note 5
– Commitments
The Company leases its facility under a non-cancellable
operating lease that expires in January 2014.
Rental expense for operating leases amounted to
$104,000 and $116,000, respectively, for the years ended
March 31, 2012 and 2011.
Future minimum lease commitments by fiscal year for all
facility leases are as follows:
March 31, 2013
|
$47,565
|
March 31, 2014
|
40,950
|
Total lease commitment
|
$88,515
|
Note 6 -
Concentrations
The Company received all of its revenue in fiscal year
2012 from a licensing agreement with Allied Security
Trust. During fiscal year 2011 the Company recorded
$50,625,000 as revenue. The vast majority of the revenue in
fiscal year 2011 was due to licensing agreements with AMD for
$35,000,000 and Apple for $12,250,000.
Note
7 – Income Taxes
The
components of the provision for income taxes are as follows
(in thousands):
2012
|
2011
|
||
Federal:
|
|||
Current
|
$(1,092)
|
$5,886
|
|
Deferred
|
1,340
|
8,263
|
|
$248
|
$14,149
|
||
State:
|
|||
Current
|
$198
|
$3,936
|
|
Deferred
|
─
|
1,838
|
|
$198
|
$5,774
|
||
Total
|
$446
|
$19,923
|
Reconciliation of the provision for income taxes at the
statutory rate to the Company’s provision for income
tax is as follows (in thousands):
2012
|
2011
|
|
Expected provision
for (benefit from) income taxes at federal
statutory rate
|
$(911)
|
$15,485
|
State income tax
benefit, net of federal effect
|
(148)
|
2,657
|
Valuation
allowance
|
1,006
|
1,780
|
Uncertain tax
positions
|
273
|
−
|
Impact of filed tax
returns
|
194
|
−
|
Other
|
32
|
1
|
Provision
for (Benefit from) Income Taxes
|
$446
|
$19,923
|
Significant
components of the Company’s net deferred tax assets are
as follows (in thousands):
2012
|
2011
|
||||
Deferred
tax assets:
|
|||||
Net operating loss
carryforwards
|
$2,005
|
$1,884
|
|||
Depreciation and
amortization
|
−
|
2
|
|||
Reserves and
accruals
|
896
|
1,340
|
|||
Other
|
39
|
−
|
|||
Total deferred tax
assets
|
$2,940
|
$3,226
|
|||
Valuation
allowance
|
(2,940)
|
(1,867)
|
|||
Net
deferred tax assets
|
$−
|
$1,339
|
During fiscal year 2012, the
Company recorded an income tax benefit of approximately $0.5
million related to both current and deferred tax
expense.
In evaluating its ability to
recover its deferred tax assets, the Company considers all
available positive and negative evidence including its past
operating results, the existence of cumulative losses and its
forecast of future taxable income. In determining future
taxable income, the Company is responsible for assumptions
utilized including the amount of state, federal and
international pre-tax operating income, the reversal of
temporary differences and the implementation of feasible and
prudent tax planning strategies. These assumptions require
significant judgment about the forecasts of future taxable
income and are consistent with the plans and estimates the
Company is using to manage the underlying businesses. Based
on expected future losses, the Company has determined that on
a more likely than not basis, it will be unable to realize
its deferred tax assets. In recognition of this risk, we have
provided a valuation allowance of $3.0 million on the
deferred tax assets. If or when recognized, the tax benefits
relating to any reversal of the valuation allowance on
deferred tax assets as of March 31, 2012, will be accounted
for as a reduction of income tax expense.
The Company’s
valuation allowance increased by $1.0 million and $1.8
million in the twelve months ended March 31, 2012 and 2011,
respectively.
As of March 31, 2012, the
Company has state net operating losses of approximately $34.9
million. State net operating loss carryforwards will expire
at various dates beginning in 2014 through 2032.
Net operating loss
carryforwards reflected above may be limited due to ownership
changes as provided in the Internal Revenue Code and similar
state provisions.
The Company accrued $0.3
million in income tax expense relating to interest and
penalties related to uncertain tax positions in the twelve
months ended March 31, 2012. The Company accrued no
interest and penalties related to uncertain tax positions
in the twelve months ended March 31, 2011. If any future
accrual is required, the Company will account for interest
related to uncertain tax positions as part of its provision
for federal and state income taxes. The Company does not
expect its unrecognized tax benefits to materially change
over the next twelve months.
A reconciliation of the
beginning and ending balance of the consolidated liability
for unrecognized income tax benefits during the year ended
March 31, 2012, is as follows (in thousands):
2012
|
2011
|
|
Balance at April
1
|
$4,097
|
$3,911
|
Additions for tax
positions of prior years
|
─
|
186
|
Reductions for tax
positions of prior years
|
(554)
|
─
|
Balance at March
31
|
$3,543
|
$4,097
|
The amount of unrecognized
tax benefit which would impact the effective tax rate, if
realized, is $3.5 million. The realization of additional
unrecognized tax benefits would increase corresponding
valuation allowance, thereby offsetting the related rate
impact.
The Company files income
tax returns in the U.S. and the state of California. The
Company is subject to U.S. federal and California income
tax examinations by tax authorities for years 1996 –
2011 and 1994 – 2011, respectively.
Note 8 -
Employee Benefit Plan
Savings Plan
The Company has a savings plan, which
qualifies under Section 401(k) of the Internal Revenue Code.
Under the plan, participating U.S. employees may defer up to
15% of their pre-tax salary, but not more than the statutory
limits. The Company currently matches fifty percent of
employee contributions made to the savings plan. During 2012
and 2011, the amount of the Company contribution to the 401k
plan was approximately $16,000 and $21,000, respectively.
Administrative costs of the plan are immaterial.
Note 9
– Contingencies
On August 2, 2010, the
Company announced that it had filed a patent infringement
lawsuit on, July 30, 2010, in the United States District
Court for the Eastern District of Texas against VIA
Technologies, Inc. (“VIA”) and Silicon Integrated
Systems Corp. (“SIS”) for infringement of two
U.S. patents. The two patents at issue in the lawsuit are
U.S. Patent No. 5,710,906 and U.S. Patent No. 6,405,291, both
entitled “Predictive Snooping of Cache Memory for
Master-Initiated Accesses”. The complaint alleges that
VIA and SIS infringe the patents by making, selling, and
offering for sale CPUs and core logic products based on and
incorporating Predictive Snooping technology and inducing and
contributing to the infringement of the patents by others.
OPTi has requested a jury trial in this matter. The Company,
in its case against VIA and SIS, is seeking damages or other
monetary relief, including pre-judgment interest and awarding
OPTi’s attorney fees. A trial date has been set for May
2013.
The ultimate outcomes of the
VIA and SIS legal actions could have significant effects on
the Company’s distributions to its shareholders which
cannot be predicted.
Note
10 – Subsequent Events
On or about May 1, 2012, the
Company solicited the written consent of its shareholders to
voluntarily wind up and dissolve the Company and adopt a Plan
of Liquidation as described in Amendment No. 1 to the
Company’s Consent Solicitation Statement on Schedule
14A filed with the SEC on April 30, 2012. As of May 31, 2012,
the Company had received consents and non-consents with
respect to 8,197,155 shares, and had not received responses
with respect to 3,448,748 shares. 69.7% of the outstanding
shares approved the Proposal. Accordingly, the Plan of
Liquidation has become effective.
On June 4, 2012, the Company
announced a cash distribution of $1.10 per share of the
Company’s stock pursuant to the Plan of Liquidation.
The distribution is to be payable on July 3, 2012 to
shareholders of record as of the close of business on June
26, 2012.
Note
11 – Quarterly Results of Operations (unaudited)
Summarized quarterly
financial information is as follows (in thousands, except per
share data):
Year
Ended March 31, 2012
|
June
30
|
September
30
|
December
31
|
March
31
|
Net revenues
|
$−
|
$−
|
$240
|
$−
|
Gross profit
|
$−
|
$−
|
$240
|
$−
|
Operating loss
|
$(873)
|
$(793)
|
$(255)
|
$(695)
|
Net loss
|
$(574)
|
$(580)
|
$(1,389)
|
$(506)
|
Basic and diluted net
loss per share
|
$(0.05)
|
$(0.05)
|
$(0.12)
|
$(0.04)
|
Year
Ended March 31, 2011
|
June
30
|
September
30
|
December
31
|
March
31
|
Net revenues
|
$35,125
|
$3,250
|
$12,250
|
$−
|
Gross profit
|
$35,125
|
$3,250
|
$12,250
|
$−
|
Operating profit
(loss)
|
$33,265
|
$2,052
|
$10,868
|
$(639)
|
Net income
(loss)
|
$19,790
|
$1,346
|
$4,823
|
$(340)
|
Basic and diluted net
income (loss) per share
|
$1.70
|
$0.12
|
$0.65
|
$(0.03)
|
Exhibit
31.1
CERTIFICATION
PURSUANT TO RULE 15d-14
OF THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
AS
ADOPTED PURSUANT TO
SECTION
302 OF THE SARBANES-OXLEY ACT OF 2002
I, Bernard T. Marren, Chief Executive Officer of OPTi
Inc., certify that:
1.
|
I have reviewed this annual report on Form 10-K
of OPTi Inc.;
|
|
2.
|
Based on my knowledge, this annual report does
not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the
statements made, in light of the circumstances under
which such statements were made, not misleading with
respect to the period covered by this annual
report;
|
|
3.
|
Based on my knowledge, the financial statements,
and other financial information included in this annual
report, fairly present all material respects the
financial condition, results of operations and cash
flows of the registrant as of, and for, the periods
presented in this annual report;
|
|
4.
|
The registrant’s other certifying officer
and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and we
have:
|
|
a)
|
designed such disclosure controls and procedures,
or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material
information relating to the registrant, including its
consolidated subsidiaries, is made known to us by
others within those entities, particularly during the
period in which this annual report is prepared;
|
|
b)
|
designed such internal control over financial
reporting, or caused such internal control over
financial reporting to be designed under our
supervision, to provide reasonable assurance regarding
the reliability of financial reporting and the
preparation of financial statements for external
purposes in accordance with generally accepted
accounting principles;
|
|
c)
|
evaluated the effectiveness of the
registrant’s disclosure controls and procedures
and presented in this annual report our conclusions
about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this
annual report based on such evaluation; and
|
|
d)
|
disclosed in this annual report any change in the
registrant’s internal control over financial
reporting that occurred during the registrant’s
most recent fiscal quarter (the registrant’s
fourth fiscal quarter in the case of an annual report)
that has materially affected, or is reasonably likely
to materially affect, the registrant’s internal
control over financial reporting; and
|
|
5.
|
The registrant’s certifying officers and I
have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the
registrant’s auditors and the audit committee of
the registrant’s board of directors (or persons
performing the equivalent functions):
|
|
a)
|
all significant deficiencies and material
weaknesses in the design or operation of internal
control over financial reporting which are reasonably
likely to adversely affect the registrant’s
ability to record, process, summarize and report
financial information; and
|
|
b)
|
any, fraud, whether or not material, that
involves management or other employees who have a
significant role in the registrant’s internal
control over financial reporting.
|
June 29, 2012
/s/ Bernard T. Marren
|
Bernard T. Marren
|
President, Chief Executive Officer
|
Exhibit
31.2
CERTIFICATION
PURSUANT TO RULE 15d-14
OF THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
AS
ADOPTED PURSUANT TO
SECTION
302 OF THE SARBANES-OXLEY ACT OF 2002
I, Michael Mazzoni, Chief Financial Officer of OPTi
Inc., certify that:
1.
|
I have reviewed this annual report on Form 10-K
of OPTi Inc.;
|
|
2.
|
Based on my knowledge, this annual report does
not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the
statements made, in light of the circumstances under
which such statements were made, not misleading with
respect to the period covered by this annual
report;
|
|
3.
|
Based on my knowledge, the financial statements,
and other financial information included in this annual
report, fairly present all material respects the
financial condition, results of operations and cash
flows of the registrant as of, and for, the periods
presented in this annual report;
|
|
4.
|
The registrant’s other certifying officer
and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and we
have:
|
|
a)
|
designed such disclosure controls and procedures,
or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material
information relating to the registrant, including its
consolidated subsidiaries, is made known to us by
others within those entities, particularly during the
period in which this annual report is prepared;
|
|
b)
|
designed such internal control over financial
reporting, or caused such internal control over
financial reporting to be designed under our
supervision, to provide reasonable assurance regarding
the reliability of financial reporting and the
preparation of financial statements for external
purposes in accordance with generally accepted
accounting principles;
|
|
c)
|
evaluated the effectiveness of the
registrant’s disclosure controls and procedures
and presented in this annual report our conclusions
about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this
annual report based on such evaluation; and
|
|
d)
|
disclosed in this annual report any change in the
registrant’s internal control over financial
reporting that occurred during the registrant’s
most recent fiscal quarter (the registrant’s
fourth fiscal quarter in the case of an annual report)
that has materially affected, or is reasonably likely
to materially affect, the registrant’s internal
control over financial reporting; and
|
|
5.
|
The registrant’s certifying officers and I
have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the
registrant’s auditors and the audit committee of
the registrant’s board of directors (or persons
performing the equivalent functions):
|
|
a)
|
all significant deficiencies and material
weaknesses in the design or operation of internal
control over financial reporting which are reasonably
likely to adversely affect the registrant’s
ability to record, process, summarize and report
financial information; and
|
|
b)
|
any fraud, whether or not material, that involves
management or other employees who have a significant
role in the registrant’s internal control over
financial reporting.
|
June 29, 2012
/s/ Michael Mazzoni
|
Michael Mazzoni
|
Chief Financial Officer
|
Exhibit
32.1
OPTi
Inc.
CERTIFICATION
PURSUANT TO
18 U.S.C.
SECTION 1350,
AS
ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF
2002
In connection with the Annual Report of OPTi Inc. (the
“Company”) on Form 10-K for the fiscal year
ending March 31, 2012 as filed with the SEC on the date
hereof (the “Report”). I, Bernard T. Marren,
Chief Executive Officer of the Company, certify, pursuant to
18 U.S.C. section 1350, as adopted pursuant to section 906 of
the Sarbanes-Oxley Act of 2002, that:
(1)
|
The Report fully complies with requirements of
section 13(a) or 15(d) of the Securities Exchange Act
of 1934; and
|
(2)
|
The information contained in this Report fairly
presents, in all material respects, the financial
condition and results of operations of the
Company.
|
/s/Bernard T.
Marren
|
Date: 6/29/12
|
Bernard T Marren, Chief Executive Officer
|
Exhibit
32.2
OPTi
Inc.
CERTIFICATION
PURSUANT TO
18 U.S.C.
SECTION 1350,
AS
ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF
2002
In connection with the Annual Report of OPTi Inc. (the
“Company”) on Form 10-K for the fiscal year
ending March 31, 2012 as filed with the SEC on the date
hereof (the “Report”). I, Michael Mazzoni, Chief
F Officer of the Company, certify, pursuant to 18 U.S.C.
section 1350, as adopted pursuant to section 906 of the
Sarbanes-Oxley Act of 2002, that:
(1)
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The Report fully complies with requirements of
section 13(a) or 15(d) of the Securities Exchange Act
of 1934; and
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(2)
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The information contained in this Report fairly
presents, in all material respects, the financial
condition and results of operations of the
Company.
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/s/Michael
Mazzoni
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Date: 6/29/12
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Michael Mazzoni, Chief Financial Officer
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